Consumer Psychology handout - mapyourshow.com

7/7/2021

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Consumer Psychology: Their Perspectives on Pricing, FOMO, Micromarketing and More!

Dr. Bridget K. Behe, Ph.D., Professor

Department of Horticulture

Michigan State University

[email protected]

Consumers have a lot on their minds (often not our stuff).

Coffee:

If coffee was coffee (commodity) then customers would maximize their utility by getting the cheapest cup they could make.

Consider consumers’ perspectives

Which plant is the best quality?

Behe, B.K., P.T. Huddleston, and L. Sage. 2016. Age Cohort Influences Brand Recognition, Awareness, and Likelihood to Buy Vegetable and Herb Transplants. HortScience, 51(2):145-151.

Branding matters: Perceived plant quality

60.1

28.1

11.8

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Equal NE Branded NE Generic

Percent responding with highest quality

Chi‐square = 104.1458, df= 2, p < 0.001

Behe, B.K., P.T. Huddleston, and L. Sage. 2016. Age Cohort Influences Brand Recognition, Awareness, and Likelihood to Buy Vegetable and Herb Transplants. HortScience, 51(2):145-151.

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2015 Consumer Study of Neonic Use Perceptions

Getter, Kristin, Bridget Behe and Heidi Wollaeger. 2016. Comparative Consumer Perceptions on Eco-friendly and Insect Management Practices on Floriculture Crops. HortTechnology 26(1):46-53.

Traditional Bee friendly or Protecting Pollinators up to a $1 premium.

Bee friendly or Protecting Pollinators worth up to a $0.25 more than recycled water or sustainable media

Low prices preferred to higher prices

Traditional least preferred, bee-friendly most preferred


Factors Important to Plant Purchase

“In thinking about your choices to buy flowering plants, how important are each of these to your purchase decision?” 1=Not at all important, 7=Very important

Not at all important

Very important

1 2 3 4 5 6 7

The flowering plant has very

little plant damage

The flowering plants have no insects on them

The flowering plant has no

pesticide residue on or in

the leaves

5.6

5.3

5.1

The plant was produced using bee-

friendly practices

4.4

No neonics were used during production of the plant

4.0


“In thinking about how greenhouse growers produce flowering plants and your potential enjoyment of such plants, indicate your agreement or disagreement to the following statements:” 1=Strongly Disagree, 7=Strongly Agree

Not at all important

Very important

1 2 3 4 5 6 7

I do not want any pesticide residues on

landscape plants

I would tolerate some pesticide

residue on flowering plants if the pesticides

controlled invasive pests (like Japanese

Beetle)

5.44.9

All pesticides are harmful

4.4

Factors Important to Plant Purchase


So What do Consumers Really Want?

• #1 Very little plant damage

• #2 No insects on them

• #3 No pesticide residue

U.S. Consumer Perceptions of Uses and Contents of Recycled

and Reclaimed Water

Nikki McClaran, Bridget Behe, Patricia Huddleston,

Charles R. Hall, R. Thomas Fernandez

Michigan State University & Texas A&M University

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What is in water (percent who agreed)?Found in water Reclaimed Recycled p value Sig?

Chlorine 44.4 43.6 0.408 No

Disinfectant 26.5 24.4 0.210 No

Dyes 20.1 a 14.6 b 0.006 Yes

Harmful bacteria 36.3 31.9 0.052 No

Harmful chemicals 34.2 a 26.6 b 0.010 Yes

Heavy metals 27.6 a 22.7 b 0.024 Yes

Helpful bacteria 15.5 14.4 0.327 No

Human waste 31.8 a 26.5 b 0.022 Yes

Herbicides 33.8 a 26.1 b 0.002 Yes

Insecticides 29.2 a 24.1 b 0.023 Yes

Minerals 30.8 34.2 0.107 NoP value from Chi-square test; Bonferroni method used to adjust p values (significant at p ≤ 0.05).

McClaren, N., B. Behe, P. Huddleston, and R. Fernandez. 2020. Recycled or reclaimed? The effect of terminology on water reuse perceptions. J. Environmental Psychology. 261

What is in water (percent who agreed)?Found in water Reclaimed Recycled p value

Nothing harmful 12.3 b 18.4 a 0.002

Plant nutrients 17.1 15.5 0.254

Pathogens 22.4 19.7 0.126

Sanitizers 22.4 23.1 0.408

Vitamins 10.6 10.0 0.398

Hormones 18.6 b 14.6 a 0.031

Prescription drugs 17.9 b 15.2 a 0.018

Pesticides 33.2 a 25.7 b 0.002

Salts 29.7 28.7 0.369

Animal waste 29.4 a 23.5 b 0.010

Composted plants 17.2 14.1 0.074

Composted animal waste 24.3 a 17.3 b 0.001P value from Chi-square test; Bonferroni method used to adjust p values (significant at p ≤ 0.05).

McClaren, N., B. Behe, P. Huddleston, and R. Fernandez. 2020. Recycled or reclaimed? The effect of terminology on water reuse perceptions. J. Environmental Psychology. 261

Words (semantics) matter

Consumers may not know, but they have an opinion.

Consider (even test) words before making a decision about what to put in communication materials.

PriceOutlay customers make to obtain a

desired product or service.

Price is an indication that something has value to both buyer and seller.

Customers have different perspectives. Not everyone thinks like you.

If you wouldn’t pay that much for something, it doesn’t mean someone else won’t pay that price.

What is value?What you get for what you pay.

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Value, like beauty, is in the eye of the beholder.

We just need to use their lens sometimes.

Five ways we “assign” value.

1. Functional value2. Epistemic value3. Conditional value4. Social value5. Emotional value

Sheth, Newman, and Gross (1991) Theory of Consumption Values

Elements of perceived value

1. Functional value

features, functions, attributes, or characteristics (how much sun? how tall? how floriferous?)

performance (how good is it at attracting pollinators?)

outcomes (environmental benefits: more pollinators)

How much is someone willing to pay?

Capacity is set (240 bottles)

“Normal” Revenue at $1 = $240

Demand rises with the temperature. Link temperature with price?

Revenue at 70F ($1) = $240

Revenue at 75F ($2) = $480

Revenue at 80F ($3) = $720

Revenue at 90F ($3.50) = $840


2. Epistemic value

Novelty

Sensory value (fragrance, flavor)

Epistemic ValueNew or novel

cultivars often are in high demand.

Why? Innovators are few in number but willing to pay a higher price.

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Elements of perceived value3. Conditional value

symbolism or meaning relating to socio-cultural events and traditions

Elements of perceived value4. Emotional value

Does the customer get joy or a positive feeling from buying or having/owning or eating the product?


5. Social value When the consumer buys the product, it can help them

enhance their perception in the eyes of others (FOMO is real. My friends are posting on Instagram!)

So many industries feature our products in their advertisements, giving us more exposure as an “in” thing to do or have.

Repeated exposure by other industries keeps us on/in customers’ minds.

Source: Wall Street Journal, November 16, 2020.

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Source: Wall Street Journal 12/2/2020

Spending for B2C online advertisements now exceeds other media

Online activities

78.1%

49.5%

34.9%

32.1%

29.4%

27.1%

14.4%

14.1%

10.3%

3%

1.8%

1.2%

7.7%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Facebook

Instagram

Twitter

Pinterest

Snapchat

LinkedIn

TikTok

Reddit

Nextdoor

Houseparty

Citizen

Other

Don't use

Share of respondents

Note(s): United States; March 31, 2020; 18 years and older; currently useSource(s): eMarketer; Business Insider; ID 111299512

Social media platforms used by adults in the United States during the coronavirus outbreak as of March 2020Social media used by U.S. adults during COVID-19 pandemic 2020

How much are they willing to pay?

Source: Chris Beytes, Acres Online, June 26, 2020

FOMO or Fear of Missing Out

Anxiety or unease about others having fun without you.

Real, especially for many active social media users.

Desire to have what others appear to have.

FOMO and Instagram Use

Neumann, D., P.T. Huddleston, and B.K. Behe. 2021. Fear of Missing Out and Social Media Use: Differential Effects of Priming on Attitudes Towards Product. New Media and Society. (IF=5.740) https://doi.org/10.1177/14614448211011834

The more active the participant was on Instagram, the more FOMO they experienced.

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Where is the value?

Why do we communicate to customers that all of the value of the product lies below the soil/media line?

Focus on features: technical aspects of the plant or its characteristics (functional value alone)

Focus on benefits: what those features mean to the consumer (other value dimensions)

Plant

Price

Plant,Feature, Benefit

Sign Position: L, M, RPrice Location: T, M, B

Features facilitate purchases, especially at higher price points

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Low Moderate High

Purc

hase

Inte

ntio

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Price point for digitally identical plants

Price only Feature Benefit

Information provided on sign

Zhu, Z., B. Behe, P. Huddleston, and L. Sage. 2017. How do Pricing and the Representation of Price Affect Consumer Evaluation of Nursery Products? A Conjoint Analysis. International Food and Agribusiness Management Review. 20(4):477‐491. DOI: 10.22434/IFAMR2017.0003

This is a good sign!

Benefit

Benefit

Benefit

“We’re all in the same stormbut not in the same boat!”

It’s been said of the pandemic,

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Source: Wall Street Journal, June 1, 2021

Price increase study

Recruited 3 reputable independent garden centers in 2012.

Used both branded (test plants) and non-branded plants (control plants).

Prices adjusted over three weeks during the spring season.

Week 1: test plants were priced 10% less compared to control plants.

Week 2: test plant priced were the same as control plants.

Week 3: test plants were priced 10% more compared to control plants.

The prices of the unbranded or control plants were held constant during this period in order to serve as a comparison.

Branded plants were representative of a differentiated product.

Source: Marco Palma, Bridget Behe, and Charlie Hall. Low Prices Do Not Sell More Plants. Today’s Garden Center, August, 2012.

Total revenue generated by the garden centers in the study during the time period (raising prices by 10%) was 2.3% higher, despite selling 8.27% fewer units.

Sell fewer units and generate more profit? Work smarter not harder.

Conversely, we calculated that if prices had been lowered by 10% for the test plants over the same time periods, actual total revenue would have decreased 27%.

What happened when we increased price?

Source: Marco Palma, Bridget Behe, and Charlie Hall. Low Prices Do Not Sell More Plants. Today’s Garden Center, August, 2012.

Consumer responses to price increases Consumer responses to price increases

Units x dollars(units x profits)

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Plant Consider a value priced menu option for several popular plant categories.

What’s it worth?

Make comparisons difficult.

Can you raise prices?

Try raising prices on a few products (experiment).

Raise them on products that are not easily compared.

Experiment and identify how many customers pushed back and also calculate profits.

Develop a value‐priced menu.

Consumers aren’t rational.

Most of our research shows that consumers make product choices based primarily (and mostly) by what the product is.

Lower prices are almost always (none in my studies) preferred to higher prices. The segment that makes product choices primarily on price is less than 25%.

Semantics matter. It matters not what they know (fact) only what they think. Meet them there. Tell them the truth. Back it with evidence.

Perceptions matter. Understand what they perceive. Then you can be the rational one.

Consumer Psychology: Their Perspectives on Pricing, FOMO, Micromarketing and More!

Dr. Bridget K. Behe, Ph.D., Professor

Department of Horticulture

Michigan State University

[email protected]

Free weekly podcast “Marketing Munchies”

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Evaluation Address:

cultivate.cnf.io

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Consumer Psychology handout - mapyourshow.com